Forexpros – Soybean futures extended their recent run of gains on Tuesday, rallying to the highest level since September as concerns over South American crop conditions and increased demand prospects from top consumer China continued to underpin prices.
On the Chicago Mercantile Exchange, soybeans futures for March delivery traded at USD12.9900 a bushel during European morning trade, gaining 0.42%.
The March contract is due to expire at the end of trading on Wednesday, February 29. Contract expirations often lead to volatile sessions as market participants look to close out positions or readjust their portfolios.
Meanwhile, the more actively traded contract for May delivery advanced 0.45% to trade at USD13.0812 a bushel.
It earlier rose by as much as 0.75% to trade at USD13.1162 a bushel, the highest since September 22.
Soybean futures have gained in 10 of the last 11 sessions and have rallied nearly 8% since the beginning of February, as traders focused on distressed crops in major South American soy growers and on indications demand from top consumer China will remain robust in the near-term.
Brazilian-based weather forecaster Somar Meteorologia said on Monday that it expected soybean-growing regions in Brazil to receive some rainfall this week.
But investors remained concerned that the rain will not be ample enough to relieve crop stress after weeks of hot and dry weather damaged crops during the growing season.
Last week, Argentina’s biggest grains exchange trimmed its forecast for soy production by nearly 5 million tonnes from a previous forecast, as drought conditions damaged crops.
The Rosario Grains Exchange now expected Argentina’s soybean crop to total 44.5 million tonnes, down from the previous outlook for 49.5 million tonnes.
Traders have been focusing on weather conditions and crop prospects in South American countries in recent weeks.
South America is a major soybean exporter and competes with the U.S. for business on the global market. A downbeat crop outlook there could increase demand for U.S. supplies.
Meanwhile, prices continued to draw support from increased demand prospects from China after China bought nearly 3 million tonnes of the oilseed last week from U.S. farmers.
According to the U.S. Department of Agriculture, China bought 521,100 tonnes of soybeans for delivery in the 2011-12 marketing year and 2.8 million for delivery in 2012-13.
The strong Chinese import numbers come after influential industry group Oil World said last week that China will import 14% more soybeans in the first three months of 2012 than a year earlier, due to declining domestic production and rising demand.
The Asian nation will import 12.5 million metric tons of soybeans from January through March this year. Last week, U.S. farmers sold 2.923 million metric tons of the oilseed to China in the biggest one-day deal on record.
China is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season.
Elsewhere on the Chicago Mercantile Exchange, wheat for May delivery rose 0.73% to trade at USD6.5675 a bushel, while corn for May delivery added 0.25% to trade at USD6.4913 a bushel.
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